Transfer apart Rolls-Royce and Fresnillo — this small-cap biotech share is skyrocketing previous among the UK’s main progress shares. Up 100% this 12 months, OXB (LSE: OXB) is taking no prisoners because it fights to recuperate its losses from 2022.

Between November 2021 and October 2022, the share price crashed 78%, falling from a excessive of £16.78 to nearly £3 per share. The price continued to fall via 2023 however has now recovered to £4.18 — the very best it’s been in over a 12 months.

So what’s subsequent for the inventory?

Chopping-edge biotechnology

Beforehand referred to as Oxford Biomedica, OXB is a comparatively small £442m inventory listed on the FTSE All-Share index. The Oxford-based biopharmaceutical firm focuses on cell and gene remedy, specialising in viral vector manufacturing. It has over 25 years of expertise working with among the main pharmaceutical and biotech companies globally. 

Lately it shifted to a pure-play contract growth and manufacturing organisation (CDMO), aiming to place itself as a pacesetter in viral vector providers, serving to different companies develop and commercialise gene therapies.

Over the previous 12 months, its portfolio grew to incorporate 37 purchasers and 48 programmes, specializing in viral vector varieties like lentivirus and adeno-associated virus (AAV). The worth of those contracts is roughly £94m as of 31 August.

Shaky financials

Final 12 months was not variety to OXB, with the share price falling 50%. Within the first half of 2023, it reported a 33% drop in revenues in comparison with the identical interval in 2022. The decline was primarily because of the non-recurrence of AstraZeneca Covid vaccine manufacturing. It additionally posted an working EBITDA lack of £33.7m, greater than the £5.8m loss within the earlier 12 months. This was attributed to inflation mixed with greater bills associated to its new Oxford Biomedica Options division.

Issues appear to be bettering in 2024, though first-half earnings had been nonetheless considerably disappointing. Each income and earnings per share (EPS) missed analyst expectations, by 4.7% and 110%, respectively. Though it posted a web lack of £32.5m, this was a 32% enchancment on H1 2023.

The steadiness sheet appears to be like okay for now, with a debt-to-equity ratio of 55.8%. Nonetheless, it’s burning via money and piling on debt, probably on account of elevated operational bills and rising bioprocessing prices.

Money and liquidity are key areas to observe as the corporate expects to interrupt even in EBITDA by the top of 2024. In an announcement made in September in the course of the rebranding to OXB, new CEO Dr. Frank Mathias stated it goals to enhance its monetary standing by specializing in its position as a CDMO.

It’s unclear how effectively the change to a CDMO will repay, however the price is already reacting positively. Nonetheless, the loss of a giant consumer like Novartis may simply flip issues round. It already faces robust competitors within the CDMO market — any drop in efficiency may end in misplaced contracts.

If issues go effectively, the transition ought to present extra steady, long-term income versus the risky revenues from inner R&D. I count on it’ll proceed to do effectively so if I weren’t already a shareholder, I’d fortunately purchase the inventory right now.